Everyone Gets Rated By Leigh Tucker

Your favorite restaurant has one. Movies have them. If you are active in social media you probably have two or three or twenty. Nonprofits have them too.

A rating. Or should we say, another rating. A more in-depth rating.

Charity Navigator, one of the original and best-publicized guides to charitable giving (full disclosure, I am on the advisory board – you can decide if that makes me knowledgeable or biased), recently unveiled a new rating system, Charity Navigator 2.0. The new system rates organizations on two levels – accountability and transparency. This creates a system whereby organizations that do well on only one dimension, can’t do well overall. In other words, nonprofits need to look for balance and not give up on one or the other aspect.

Ken Berger, the president and CEO of Charity Navigator, is expecting to be raked over the coals by those who either don’t do well under the new system (maybe some former four star rated organizations who are a tad too secretive) or those who see the new expectations as onerous. But why should nonprofits be any different from the rest of the universe? And why wouldn’t they all see the CN’s suggestions as anything but helpful?

Truly excellent companies measure everything. How else would they know which areas need improvement? My firm, Accounting Management Solutions (AMS), measures customer satisfaction. At the end of every engagement (or at regular intervals during longer engagements) we have a member of our client service team contact clients and survey them on their perception of the project. (A round of applause for our consultants; our clients give them a ninety-eight percent satisfaction score. Ninety-eight percent of our clients say the AMS consultants meet or exceed expectations.)

Public companies measure and report openly. Sarbanes-Oxley (SOX), enacted in 2002, set new standards for all U.S. public companies. It was enacted in reaction to a number of major corporate and accounting scandals including Enron and Tyco. These scandals cost investors billions of dollars.

While nonprofit scandals don’t impact investors, they do impact donor confidence, which hurts everyone in the industry. Whether a board member, executive director, volunteer or staffer, we all have a responsibility (yes, a fiduciary responsibility) to make sure our organizations are accountable and transparent. If tools like the CN 2.0 project can help the cause, I’m all for it.